Markets

Why "organic" shampoo can be loaded with chemicals

When it comes to product labels, a billing of "natural" is basically meaningless, while something certified "organic" actually has some teeth. That's unless the items involve personal care or household cleaning, which have fallen through the cracks of government oversight.

"It's innocent until proven guilty for chemicals in consumer products," said Julia Brody, executive director of Silent Spring Institute, a nonprofit group that researches the links between exposure to chemicals in everyday products and breast cancer. Brody is referring to a system where regulatory action typically follows consumer complaints. "A lot of consumers go to the store with the assumption if it's on the shelf, that it's been tested for safety," she said.

Much of what's on a product's label involves marketing, rather than information for consumers, said Londa Vanderwal Nwadike, a food safety specialist at Kansas State University/University of Missouri. "There is a regulation that says labeling terms should not be misleading. How much that's enforced is another question."

Illustrating the climate in which purveyors of natural goods operate are recent developments at Hain Celestial Group (HAIN), one of the nation's biggest makers of natural shampoos and skin cleansers.

Already under fire after The Wall Street Journal reported that Hain's Celestial Earth's Best baby shampoo contained a chemical cleansing agent despite claims to the contrary, Hains Celestial in February separately settled for $7.5 million a class action by a California resident and the nonprofit Center for Environmental Health, or CEH, which sued over the organic labeling of its Avalon Organics and Jason personal care product brands.

The Journal commissioned testing, which found sodium lauryl sulfate, or SLS, in Hains Celestial Earth's Best baby shampoo, as well as in laundry detergent made by upstart Honest Co. Hains responded by saying it was already working on revamping its ingredients, while Honest Co. disputed the newspaper's findings.

The Journal's findings and court case highlight a gap in oversight of the term "organic," which unlike the word "natural" has a specific meaning on a product label and is regulated by the U.S. Department of Agricultural and overseen by independent certifiers. That said, the USDA's organic oversight does not extend to personal care products, unless its makers use the USDA organic seal.

But California has a more stringent organic standard, which unlike the federal rule, specifically covers cosmetics. "In California, it has to contain at least 70 percent organic ingredients, excluding water and salt. We discovered a number of years ago the law is widely ignored," said Howard Hirsch, an attorney and outside counsel for the CEH. The nonprofit sued about two dozen personal-product companies in 2011 over their organic labeling claims, reaching settlements with most of them later that year.

With Hain Celestial, a class action was filed on behalf of CEH and consumers who paid more for its products because they believed them to be organic. The company is "one of the biggest actors with the biggest sales and causing the biggest impact on the market," Hirsch explained. "With Hain you had a large publicly traded company that prides itself on being a leader in the organic natural marketplace."

In the next couple of weeks, checks will be mailed to around 22,000 consumers in California who purchased personal care products that Hain Celestial billed as organic. Of the $7.5 million it's paying, about $4 million will cover legal fees, and the remainder will cover the cost of notifying and refunding consumers. Any unclaimed cash will go to organizations including the California Consumer Protection Foundation, Hirsch said.

Because of California's size, companies forced to adapt to its rules will likely do so nationally, said Hirsch. Still, he advises consumers to read the list of ingredients. "From a consumer standpoint, a lot of people are surprised that you can call it organic if it's only 70 percent," said the lawyer. "Even if the front label says organic, it's worth flipping to the back. Companies play fast and loose with the rules, so 30 percent could be rat poison and you can call it organic."

On Thursday, Hain Celestial said in a release that its Avalon Organics line of personal care products had been repackaged and some of it reformulated, steps the company said are in response to consumer preferences and also part of an annual innovation review.